The biggest difference from before is this: Cutting production to keep prices high won't work. Cutting production to keep prices from being too low can work. As long as prices stay in the 50-70 range the risk of a lot of new projects stays low and depletion has time to do its thing.
Will the saudi's cut on their own? No. I think Russia is their main target as they are on opposite sides of Syria. Plus the sauds have a lot more reserves than Putin and can afford to hold out to see if Russia folds. Russia doesn't cut, Saudi's won't cut.
I don't think the Saudi's care if Iran agrees to cut or not (they won't), since Iran's production is so much lower than SA, the gain from higher prices benefits SA far more than Iran.
SA may require Iraq to cut, but I think if Russia swings in favor of cuts, Opec will mainly follow. At least enough of a cut to get back to 50-70.
In 2014 the Saudis shocked much of the world by refusing to play swing trader anymore. And they were absolutely correct in their view. If they had cut 1 mbpd, and oil went back to $100, it wouldn't be long until the shale boys ramped up an additional 1 mbpd and put the sauds right back in the same bind. Instead they thought, well we won't cut, oil will go down to $50-60 and shale will crack.
That didn't happen. I don't think they ever expected to see oil in the 20-30 range from their action. Now their thinking has to be reversed. Instead of asking, what price will it take to break shale, now they need to ask, what price does it take for shale to start adding production?
Now I believe they will consider (only joint with Russia) a small cut to bring oil back UP to 50-60, just high enough to ease the pain, but not high enough for new projects to roar back to life. At that point they can just wait for demand increases over time to allow an eventual recovery of production from all sources.
It looks to me like those calcs include paying the pref shares correct? If you take that out, it seems like they can survive $30 for all of 2016. That's something anyway.
Pretty much just means the spread between brent and wti goes away. So what? We still have to import a lot of oil.
So the div is being dropped down into the 1.6-1.7 range, but the AFFO is still going to be about $2.60. That means they aren't making less money, just paying out less money. To my knowledge this will be the first time in a long long time that they aren't paying out everything they make. That means there might actually be some left over money to invest. What a crazy concept!! Book value might actually increase.
I can see why the market finds this positive. Maybe the downward spiral will finally end and a new era of growth will begin.
"Nobody is in the Drip now"
Did the company actually announce and end to the drip? I must have missed that. Do you have a reference?
How many more projects are being cancelled right now? how many employees are being let go? One of these days, production is going to drop hard and everyone will be surprised.